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24 Apr 2009

The Productivity Commission to inquire into the Australian anti-dumping and countervailing system

by Stuart Clark

The Commission has released an issues paper, to call for submissions from interested parties. The Commission’s report to the Government is due by 23 December 2009

On 23 March 2009, Chris Bowen, the Treasurer, and Bob Debus, the Home Affairs Minister, announced the Productivity Commission would undertake an inquiry into Australia's anti-dumping and countervailing system, and an issues paper was released on 17 April. The inquiry is part of a broader initiative by Council of Australian Governments (COAG) towards competition reform. It also follows an earlier administrative review of the anti-dumping and countervailing system in 2006 by the former Minister for Justice and Customs and Minister for Industry, Tourism and Resources (Joint Study).

The current system

Under the current system, the Government may impose dumping duties and/or countervailing duties on goods that are exported to Australia. Specifically, section 269TG of the Customs Act 1901 (Cth) provides that companies may be liable to pay dumping duties when:

  • goods are exported to Australia at a price that is lower than the "normal value" of the goods, which is usually the domestic price of the goods in the country where the goods were exported from; and
  • because of the dumping, material injury to an Australian industry is caused or is threatened to be caused or the establishment of an Australian industry has been or may be materially injured.

Section 269TJ of the Customs Act provides that countervailing duties are payable when:

  • a subsidy that is paid by a foreign government, which benefits an exporter of goods to Australia, has been received; and
  • because of the subsidy, material injury to an Australian industry is caused or is threatened to be caused or the establishment of an Australian industry has been or may be materially injured.

Scope of the inquiry

The scope of the inquiry will include:

  • reviewing the rationale for and objectives of the current system and assessing the effectiveness of the system in achieving those objectives
  • analysing the costs and benefits of the current system on the Australian economy, including its impact on industries, consumers and the broader community
  • assessing the administration of the anti-dumping system, taking into consideration the concerns of importers and domestic industry, including the costs of compliance and administration, timelines, business certainty and access to the system; and
  • making recommendations on the future role of the anti-dumping system within the framework of the Government's overall policy objectives.

Comments

There are a number of frustrating features inherent in the current system, including:

  • As part of the inquiry process, Customs sources information from Australian industry, importers and exporters. The system permits that this information can be supplied on a confidential basis and only redacted forms of information are placed on the public record. Unlike litigation, the process is not transparent. There is no meaningful way that one party can correct the statements of another. Confidential information provided in the form of indices is not useful. It is possible for an exporter or importer not to be clear at different stages as to the case being made against it. It is only if the parties commence a Federal Court action that lawyers can get access to confidential information with appropriate undertakings being given. The US has a system where lawyers can get access to confidential information during the investigation. This is controlled by legislation and the sanction for unauthorised disclosure is disbarment.
  • Once Customs has completed its investigation, it provides its draft findings in a Statement of Essential Facts. Interested parties are invited to make submissions on the findings. However, the findings in the Statement of Essential Facts are in effect a concluded view. We are not aware of any case where Customs has changed its view.
  • Our experience is that the treatment given to issues of material injury is insufficient as these inquiries are rushed at the end of the inquiry process. It would be preferred if the issues of dumping and material injury were considered in parallel. The actual time to conduct an investigation of 155 days is too short. Most administrations take up to one year.
  • An anti-dumping inquiry is not a merit review process. The rights of appeal are limited to showing that the decision was unreasonable.

Broader policy matters which were raised by interested parties at the time of the Joint Study but which did not form part of the report because they were outside the terms of reference can now hopefully be addressed. These include:

  • public interest test: should you impose measures if the measures exceed the benefit to consumers
  • the role and function of the Trade Measure Review Officer
  • the role of the Minister in being the decision-maker
  • the need for any type of special court to consider anti dumping and countervailing cases
  • imposing time-limits on the Minister in making a decision (at present there are none); and
  • anew Ministerial Direction on material injury with a particular focus on assessment of profit.

Next steps

Initial submissions on the issues paper are due 26 June, and the draft report is expected in early September. Public hearings on the draft report will be held during October, and the final report is due on 26 December 2009.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.